The need to come up with a budget in order to be better at handling one's finances is no longer a new thing. In fact, it is safe to say that even before the phrases “personal finance” or “money management” had been coined, people had long been trying to be keen at allocating certain portions of their earnings into things that will help them live the life they want.
A lot of people these days, though, would say that they've had enough of the “whole budgeting thing” as it “failed” to work for them. These very common “failure” scenarios can be laid out as the untold budgeting horror stories. All these are caused by at the 3 major budgeting pitfalls.
A Neglected Necessity
Celebrities, athletes and the many other prominent people who suffer the painful blows of bad finances will never be able to blame “low income” for their enigma. Practicing good financial handling is more about being mindful of spending than having a lot of money.
One of the things that make budgeting something that people overlook or neglect is the fact that they don't see it as a necessity. The truth is, putting together a budget is not only for those who…
…need to put money away for something they had been wanting to have such as vacation abroad,
…figure they'd need a huge sum for something essential, such as a medical procedure,
…have to pay-off debts and/or mortgage while being able to live a decently comfortable life,
…think they are earning something way too little that it barely covers their needs,
…are looking forward to enjoying a really well-off future.
Every person, regardless of how much he earns, how much he needs to set aside and how well-off he wants his future to be, has to come up with budget plans. From the income standpoint, it is not always about how much you earn. It is more about allocating money to the essentials whilst being mindful of the things you save for without compromising the quality of your life.
The Unforgiving Scheme
While overlooking the need to come up with a budget is a horror story of its own, being hard on yourself because “you have to follow the figures” makes another budgeting horror story.
When you are trying your best to live within your means, you have to be very mindful of the balance between…
- Following your budget by heart; and
- Giving yourself some room for slip-ups
Setting up an unrealistic plan will only perk you up for the challenge. However, touching base with reality considering the degree of change you may have to take in order to be better at handling your money is something that is more motivating.
Think of this scenario:
If you figure that giving up your visits to Starbucks is something that will need some time, then at least be keen to include these visits in your budget. If you are spending, say, $100 on Starbucks each month, the moment you draft your first budget plan try to allot $75 for it.
Alternatively, you can find means to quench your thirst for coffee while cutting down on Starbucks. Perhaps you can invest in a good coffeemaker while allotting about $50 for homemade coffee each month.
Uninvited Intermissions
So you have already plotted your budget and so far everything is going well until your friends call you up for pedicure. While the nail ladies are working on your toes, your friends suddenly figure that it is a nice day to have a massage. Instead of being the odd one out, you join in even when you don't get a massage regularly.
The pedicure can be forgiven especially if you are someone who actually allots a few dollars on your toes per month. However, the massage is something else. It costs a lot and it isn't a budget item.
In this case, the massage is your “uninvited intermission.” There will always be times when there are things or situations that will pop right in front of you and you just “have to” spend on them. Being aware of these things will help you be better at taking control of your money.
To spare yourself from turning your budgeting scheme to a horror story just because of some unforeseen expenses, you should…
- …learn to compromise. If saying “no” is something that you are still working on, then it would be healthy to start with a compromise. You can do this by including an “extras” section in your budget's variable expenses portion. This should come at least after fixed expenses so that whatever the amount you'll spare for this portion is actually an extra amount.
- …learn to say “no.” Going back to our scenario above, you should try not to feel sorry because you'll let the massage slip. Also, you need to understand that it is not necessary to feel like the “odd one out.” Saying “no,” will actually turn to be something you'll be happy about considering the amount of money you'll save.
A lot of people who are having a hard time believing in the things budgeting can help them with, may have been traumatized by any of these horror scenarios. However, just like what we have shown above, there is always a way out of the horror.
The “way out” that's being referred to here is still courtesy of mindful budgeting.
You have to understand that there is no such thing as a cookie cutter budget plan, though. You can only acquire budget templates but in order for these tools to work for you, you should consider and assess your current spending habits.
This way, you can come up with a plan that applies to your current situation. Again, give yourself some room for improvement. If this day you've spent beyond the day's allocated budget on food, for instance, remember that there still is tomorrow.
Don't forget to take the time to assess your progress. For every progress you will make, adjust your budget accordingly.
People find it hard to open up when it comes to money matters. This is why the stories of frustrations, even after one works out a budget, are commonly untold. But now that we already have pointed out the 3 pitfalls that cause these mishaps, all it takes is to keep what we have here in mind while putting them in practice. That way, you'll be smarter at making budget planning work to your full advantage.
